Growing Starwood: Can Heyer, Sternlicht forge suite relations?

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Can Steven J. Heyer play nice?

That's the biggest question to emerge from last week's announcement that Mr. Heyer, the former president-chief operating officer of Coca-Cola Co., will take over as CEO of Starwood Hotels and Resorts Worldwide Oct. 1. Mr. Heyer, 52, will replace Barry S. Sternlicht, 43, who will remain at Starwood in the newly created role of executive chairman.

That Starwood, the world's third largest hotel chain behind Best Western and Marriott, is getting an innovative marketing mind is a given. Mr. Heyer has established himself as a leader in new marketing methods that combine traditional advertising and branded entertainment content. He may well need those skills to carry out Mr. Sternlicht's vision to "build a culture maniacally focused on the customer and a revenue/profitability driven enterprise."

But whether the two headstrong execs are able to mesh is a topic far more tangible than either would like the public to believe. In fact, an analyst report from Raymond James & Associates said the appointment "fills out what is undoubtedly one of the top management teams in the industry," but warned "many of us will closely watch the interaction between the two well-proven executives (both men are notoriously strong willed and opinionated)."

Starwood would not make the executives available for interviews and Mr. Heyer did not respond to e-mail questions.

Mr. Heyer's sometimes-abrasive management style was certainly not popular, nor was his reported indifference to some other Coke executives. Ultimately, his vision was in stark contrast to the conservatism of Coca-Cola's board of directors, and he was passed over in favor of E. Neville Isdell when it came time to replace retiring chairman-CEO Douglas Daft earlier this year.

While Mr. Heyer might not have that problem with Starwood's board-which has been generally receptive to forward thinking-he still has to form a working partnership with Mr. Sternlicht.

"Barry and Steve have been phenomenal separately and should prove truly incredible as a team," said Daniel W. Yih, Starwood board member and co-chair with Mr. Sternlicht of the CEO search committee, in a press release.

growth amid setbacks

Under Mr. Sternlicht, Starwood, with more than 750 properties worldwide under the names Sheraton, Westin, W and St. Regis, has held up fairly well in an industry that suffered greatly following the Sept. 11, 2001 terrorist attacks. Starwood earned $309 million in revenue last year on sales of $3.78 billion. Its stock, which closed at $46.17 on Sept. 22, is up more than 25% since the beginning of the year.

Still, Mr. Sternlicht has given Mr. Heyer an edict to grow the brands.

Whether that means shaking up Starwood's marketing, as he did with Coca-Cola, remains to be seen. Mr. Heyer has a strong relationship with WPP Group, and in February of 2003, moved the $250 million Coca Cola Classic account from long-time Interpublic Group of Cos.' agency McCann Erickson to WPP's Berlin Cameron/Red Cell.

Interpublic's Deutsch, New York, handles Starwood's two biggest accounts, the Sheraton and Westin brands, with a combined annual ad spending of $75 million.

Five challenges facing Heyer

1 Build Starwood's non-hotel brands, like its Bliss spas and golf resorts, among others.

2 Keep Starwood's brands in big, urban markets at the forefront of business travelers' minds.

3 Continue to grow finances exponentially as the industry recovers from 9/11.

4 Integrate Starwood's bigger Sheraton and Westin brands into avenues of new marketing.

5 Keep the campers happy. Mr. Heyer negotiated to remain a resident of Atlanta, though he said he will travel often to Starwood's White Plains, N.Y., headquarters. He'll need to win friends quickly.

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